Read To the Brink and Back: India’s 1991 Story Online
Authors: Jairam Ramesh
To the Brink and Back: India’s 1991 Story (18 page)
Today, Finance Minister took a meeting with Principal Secretary to PM, Finance Secretary, Industry Secretary and Commerce Secretary.
The following are the main points that emerged from this meeting:
(i) Department of Industrial Development and Ministry of Commerce would put together a document on the economic changes that have taken place in the last few weeks. This would be written in simple language and would be meant for distribution to foreign audiences including embassies abroad, leading newspapers etc.
(ii) The Press Note on foreign investment would be got ready by today or tomorrow.
(iii) It was agreed that the Board on Foreign Investment Approvals would be compact and comprise of Principal Secretary to PM, Finance Secretary, Secretary (ID) and Commerce Secretary. Other Secretaries would be coopted as and when necessary. Principal Secretary would explore the possibility of having the Secretariat of this Board located in PMO to begin with.
(iv) Finance Minister suggested the appointment of special envoys of PM to travel to major countries like USA, Japan and Germany to explain our policies and interact with senior officials. Names mentioned in this regard were Shri
M. Narasimham to East Asia,
Dr. I.G. Patel to some western countries, Shri
V. Krishnamurthy to West Germany etc. Principal Secretary to PM would get PM’s approval for this concept.
(v) Finance Minister also desired that influential people from abroad, whether politicians, intellectuals, bankers, industrialists or academics be invited to come to India. This would be part of a marketing strategy.
(vi) On the follow up to negotiations with IMF and World Bank, it was decided that a Steering Group would be set up for monitoring the implementation. This group could consist of Principal Secretary to PM, Finance Secretary, Commerce Secretary, Industry Secretary and Secretary (PE). The inclusion of Secretary (Labour) and Secretary,
Planning Commission could be considered as necessary. Finance Minister would take necessary steps in this regard.
(vii) Principal Secretary to PM mentioned the need to explore economic relationships with countries other than USA, Japan and Germany. In this regard, he mentioned Singapore and Taiwan and other countries in the East which have sizeable population of Indian origin and could be sources of investment.
(viii) Finance Minister drew attention to the need for follow up on many of the initiatives proposed in the Budget. These initiatives involve many ministries, other than the Finance Ministry. Finance Secretary proposed that the monitoring of these initiatives be taken up in the Steering Group under Pr. Secretary to PM.
(ix) Finance Minister suggested that the services of Shri S.K. Jain, former DDG in the International Labour Organisation be utilised in connection with the
National Renewal Fund.
(x) The Law Ministry has expressed reservations on the SBI Bonds that have been proposed in the Budget. Principal Secretary to PM and Finance Secretary would have the matter clarified with Law Secretary so that the bonds could be issued soon.
(xi) Finance Minister suggested that he use his reply on the Budget as an opportunity for announcing concrete initiatives regarding NRI investments. Some initiatives have already been announced as part of the Budget. Some further initiatives were discussed including dual nationality for NRIs and use of exim scrips for remittances. Commerce Secretary mentioned the need to amend FERA also.
(xii) Finance Secretary would have the matter on import of edible oil from USA under Title III Grants examined.
(xiii) Secretary (ID) would take follow up action on the proposals to set up a Tariff Commission as contained in the Budget.
Finance Minister suggested that such a meeting could be held once a week to exchange ideas and review implementation of various policies.
Jairam Ramesh
16.8.91
A day prior, the prime minister’s traditional Independence Day speech had been a sombre affair. The high point of the speech was the sharp reference to the
public distribution system—or PDS, as it is known in government circles—which is the nationwide network of over 4.5 lakh ration shops.
One of the key officials in the PMO was an Andhra Pradesh-cadre IAS officer,
K.R. Venugopal, who was an acknowledged authority on PDS. He had much to do with what the prime minister said on the subject that morning. The prime minister announced his intention to restructure the PDS through which essential commodities like rice and wheat are distributed. Subsequently, such a restructured PDS was introduced, focussed on 1,700 of the poorest and most backward blocks of the country.
Besides PDS,
Narasimha Rao spoke about rural development
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and included a reference to the modernization of land records, an initiative launched in 1988 by Rajiv Gandhi, and with which
Sam Pitroda and I had been involved. Unfortunately, the modernization and continuous update of land records is still far from complete and remains a pressing need.
A day after
stock-taking, the finance minister met all trade union leaders. It was a long meeting, with labour representatives cutting across the political spectrum, highly critical of the industrial policy reforms and of the budget as well. Their arguments were predictable—a sell-out to the IMF, the opening of doors to multinationals, the death of the small-scale sector, backdoor privatization and freedom to retrench.
The finance minister, in turn, made his points without yielding much, but promised regular interactions with trade unions. He reiterated that there were no plans to privatize public sector companies and drew attention to the
National Renewal Fund announced in his budget.
The labour leaders were clearly not satisfied but felt happy that the prime minister invited them over to his residence when their meeting with Manmohan Singh ended. The prime minister gave two assurances—no privatization and no exit policy talk, of which there had been some discussion.
At times, listening carefully and attentively itself earns dividends. And this is what happened that night.
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It is generally not known that in addition to industry, Narasimha Rao kept the rural development portfolio to himself. He held on to the latter for four years, the second-longest tenure ever. He secured for rural development a huge increase in outlay in the
Eighth Five-year Plan. To execute his priorities, he appointed another Andhra Pradesh-cadre IAS officer, B.N. Yugandhar as secretary, rural development. In the recent past, Yugandhar has been known as the father of Satya Nadella, the CEO (chief executive officer) of Microsoft, as has K.R. Venugopal as the father of Mrs Nadella. It was at Narasimha Rao and Manmohan Singh’s insistence that a new Employment Assurance Scheme (EAS) was launched in October 1993 in 1,778 of the most backward and ecologically-stressed blocks of the country. This was based on Maharashtra’s Employment Guarantee Scheme, which had—at Defence Minister Sharad Pawar’s suggestion, and following a study group of Congress MPs headed by Mani Shankar Aiyar—been recommended for nationwide adoption. I had assisted the group of Congress MPs. The EAS was one significant milestone on the road to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) passed by Parliament in September 2005.
The Prime Minister’s
Gorbachev Goof-up
had seen
Mikhail Gorbachev once, fleetingly, at the prime minister’s residence on 19 November 1988. Rajiv Gandhi had asked
Sam Pitroda to make a presentation to the visiting Soviet leader on new technological and economic directions that the
Indo-USSR
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bilateral relationship could take. Pitroda had roped in
Ashok Ganguly, then chairman of Hindustan Lever, and
V.S. Arunachalam, then scientific adviser to the defence minister. The four of us put together a presentation. Pitroda, Ganguly and Arunachalam made the presentation to the two heads of state (with 35mm slides since this was a pre-PowerPoint era), while aides like me sat in the adjacent room.
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Fast-forward to 19 August 1991—the day
Gorbachev was ousted (temporarily, as it turned out) in a coup. When I reached the office on the morning of 20 August, I was inundated with phone calls from all sorts of people. The most concerned was the finance minister himself who asked me whether I knew why the prime minister had said what he had the day before, which had been reported on the front page of the
Hindustan Times
. No other newspaper had given the prime minister’s remarks on the coup in Moscow any prominence except for this daily, in a news-item that went thus:
PM: It is a warning to reformers
New Delhi, Aug 19 (UNI, PTI)
Prime Minister
P.V. Narasimha Rao today said the ouster of Soviet President
Mikhail Gorbachev was a warning that any leader who chalks out plans for the future should take each step cautiously.
Mr. Narasimha Rao took note of the political developments in
Soviet Union while addressing a national convention of the Youth Congress workers here on the occasion of the 48
th
birth anniversary of Mr. Rajiv Gandhi.
He recalled the close friendship between Mr. Gandhi and Mr.
Gorbachev and in this connection mentioned their respective contributions for the improvement of the lot of their people.
The prime minister’s statement was a dynamite.
A.N. Verma, on learning what had transpired, was worried about the implications of Rao’s comments, much like the finance minister. Would this put economic reforms in jeopardy, the two of them wondered when I met them to discuss the statement. Finally, I thought it best to ask the prime minister himself. The prime minister, on his part, really did not elucidate or enlighten, except to say that every country must choose the pace of change suited to its ‘genius’. He also recalled the disastrous impact of the
Shah of Iran’s modernization programme
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and then said something to the effect that we must be careful and cautious.
Meanwhile, the minister of state of external affairs,
Eduardo Faleiro, had also given out a statement which was, once more, Mandarin-speak. He said: ‘India is watching the situation. It is an internal development of the
Soviet Union.’
On 20 August,
Madhavsinh Solanki, the external affairs minister, spoke in the Lok Sabha in further detail and said:
Sir, India attaches the highest importance to its relations with the USSR which are based on the universally accepted principles of conducting inter-state relations and are reflected in the
Indo-Soviet Treaty of Peace, Friendship and Cooperation. It was because of the importance that both countries attached to the Treaty that very recently they jointly announced their intention to extend it by a further period of twenty years. The above events in the
Soviet Union are thus of vital interest to us and indeed to the whole world. The Government of India is, therefore, constantly and carefully monitoring the situation there since receiving reports of the announcements and is maintaining close touch with the situation in this regard.
But the damage had been done. It was the prime minister’s remarks that held sway. In the Lok Sabha,
Jaswant Singh, later to become external affairs and finance minister under
Atal Bihari Vajpayee, pilloried the prime minister thus:
